Who this is for
Restaurant, cafe, bakery, catering and food production businesses buying equipment, furniture, point-of-sale systems or doing a kitchen fit-out.
Six things to check
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It is a capital purchase. Equipment that lasts more than a year is not a supply. Under the current rules it goes into a capital cost allowance class and a percentage is deducted each year.
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What the 2026 proposal would change. The Productivity Mega Deduction, announced September 15, 2026, proposes immediate expensing of most depreciable property acquired on or after that date. The full cost would be deducted in the year the equipment becomes available for use. Buildings and some other classes are excluded. It is draft legislation, not law, as of this guide’s date.
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Available for use decides the year. Not the order date, not the deposit. The equipment has to be delivered and ready to work.
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Leasehold improvements are different from equipment. Renovating a leased space falls under its own class and rules. Keep the invoices separate from the equipment invoices.
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Financing does not change the deduction. A financed oven is deducted the same way as one paid in cash. The interest on the financing is a separate expense. What changes is cash flow, which matters more than the deduction for most restaurants.
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A deduction is not a refund. The tax saved is the cost multiplied by the business’s tax rate, and only if there is income to deduct it from. A business with a loss gets no cash benefit this year from a bigger deduction.
One thing many people do not realize
The deduction depends on the date the equipment is available for use, not the date you paid the deposit. An oven ordered in August, delivered in November and installed in December is available for use in December. If the fiscal year ends November 30, the deduction falls in the next year. Timing a purchase for a tax year means timing the delivery and installation.
What to prepare
- Quotes or invoices with the expected delivery and installation dates
- Whether the purchase is financed or leased
- Your fiscal year end
- Last year’s return, so the income available to absorb the deduction is known
When professional help may make sense
A large purchase close to year end, a lease that might be a purchase in substance, or a fit-out that mixes equipment and leasehold improvements. Each changes the year and the class.
How Rex Tax may be able to help
We prepare corporate and self-employed returns for food businesses and set the capital cost treatment correctly. Our general guide on the write-off proposal explains the measure in full.
Official sources
- Department of Finance news release, September 15, 2026: Productivity Mega Deduction
- CRA: Classes of depreciable property
This guide is general information, not advice about your situation. It reflects the rules for the 2026 tax year. Rules described are those in effect from September 15, 2026. It has not yet been reviewed by a practitioner. The information was checked against the official sources listed above on the date shown. Rules change. Check the official sources above or ask us. How we prepare these guides.